Introduction: A Costly AML Misunderstanding in the UAE

Many UAE businesses believe they are compliant because they review transactions manually. Regulators, however, are looking for something very different in 2025: continuous, risk-based transaction monitoring.

Confusing transaction review with transaction monitoring is one of the most common AML weaknesses identified during inspections. This gap has led to regulatory findings, remediation orders, and financial penalties—especially for SMEs and DNFBPs.

In this guide, we explain the difference, why regulators care, and how UAE businesses can fix this issue before it becomes a compliance failure.

Why This Distinction Matters More in 2025

UAE AML supervision has evolved from a document-focused approach to an effectiveness-driven model. Regulators now assess:

• How risks are identified in real time

• Whether suspicious patterns are detected early

• If escalation decisions are timely and justified

A one-time or periodic transaction review no longer meets regulatory expectations.

Transaction Review vs Transaction Monitoring: The Core Difference

Transaction Review (What Many Businesses Do)

Transaction review typically involves:

• Manual checks of selected transactions

• Periodic review (monthly or quarterly)

• Static checklists and thresholds

It is reactive, limited in scope, and highly dependent on human judgment.

Transaction Monitoring (What Regulators Expect)

Transaction monitoring is:

• Continuous and automated (or semi-automated)

• Risk-based and dynamic

• Pattern-focused, not transaction-isolated

It identifies unusual behavior over time, not just one-off anomalies.

What UAE Businesses Commonly Get Wrong

1. Treating Reviews as Monitoring

Many businesses claim they “monitor transactions” when they actually:

• Review samples

• Look only at high-value transactions

• Check transactions after completion

Regulators consider this insufficient and outdated.

2. Ignoring Transaction Patterns

Money laundering rarely appears in a single transaction. It is often detected through:

• Repeated similar transactions

• Structuring below thresholds

• Sudden changes in behavior

Manual reviews almost always miss these patterns.

3. No Link Between Customer Risk and Monitoring Intensity

Under a risk-based approach, high-risk customers require:

• More frequent monitoring

• Lower alert thresholds

• Enhanced scrutiny

Applying the same review process to all customers is a regulatory red flag.

Why Real Estate Is Especially Vulnerable

Real estate continues to attract illicit activity because:

• Properties involve high-value transactions

• Funds can be layered through intermediaries

• Ownership structures can obscure the real beneficiary

Without proper transaction monitoring, businesses fail to detect:

• Unusual pricing

• Third-party funding

• Repeated property flips

These weaknesses have already triggered enforcement actions in multiple jurisdictions.

The Risk-Based Approach: Where Monitoring Fits In

What a Risk-Based Approach Requires

A proper RBA means:

• Identifying higher-risk clients and transactions

• Adjusting controls accordingly

• Continuously reassessing risk

According to Financial Action Task Force guidelines, transaction monitoring is a core pillar of effective AML systems.

Why Reviews Alone Fail the RBA Test

Transaction reviews:

• Are static

• Do not evolve with customer behavior

• Provide no early-warning capability

This directly contradicts RBA principles.

What Regulators Look for During Inspections

UAE inspectors, guided by Anti-Money Laundering and Combating the Financing of Terrorism Supervision Department under the Central Bank of the UAE, typically assess:

• How alerts are generated

• Whether monitoring thresholds are risk-based

• How suspicious activity is escalated

• Evidence of follow-up actions

A spreadsheet or periodic checklist rarely satisfies these requirements.

Common Inspection Findings Linked to Poor Monitoring

• “No evidence of ongoing transaction monitoring”

• “Alerts not aligned with customer risk profile”

• “Suspicious patterns identified too late”

• “Manual controls inadequate for transaction volume”

These findings often lead to mandatory remediation programs.

Practical Steps to Fix the Problem

1. Separate Review From Monitoring

Businesses should clearly define:

• Transaction monitoring (continuous)

• Transaction review (follow-up and investigation)

Both are needed—but they serve different purposes.

2. Implement Risk-Based Monitoring Rules

Monitoring rules should consider:

• Customer risk rating

• Transaction frequency and value

• Geography and payment method

High-risk customers should trigger alerts faster.

3. Document Alert Handling and Escalation

Regulators expect:

• Clear escalation workflows

• Documented rationale for decisions

• Evidence of timely action

4. Train Teams on Pattern Recognition

Staff should understand:

• Structuring techniques

• Layering indicators

• Behavioral red flags

Technology supports monitoring, but human judgment still matters.

5. Seek Professional AML Support

Advisory firms like Swenta help UAE businesses:

• Design monitoring frameworks aligned with regulatory expectations

• Bridge gaps between accounting, operations, and AML

• Prepare for inspections with confidence

Why This Matters Beyond Compliance

Effective transaction monitoring:

• Reduces regulatory risk

• Strengthens relationships with banks

• Improves internal financial controls

• Protects business reputation

In contrast, relying only on transaction reviews leaves businesses exposed.

In the UAE’s current regulatory environment, transaction monitoring is no longer optional. Businesses that confuse it with transaction review are operating with a false sense of security.

Regulators are clear: AML compliance must be continuous, risk-based, and demonstrably effective. Fixing this misunderstanding now can prevent serious consequences later.